Preparing my offering: if you sell software or a service
Lesley Batchelor OBE is an expert on international trade and a passionate champion of UK exporters. She is also the Director General of the Institute of Export, the professional membership body representing and supporting the interests of everyone involved in importing, exporting and international trade. In this article, Lesley explains everything you need to do if you sell software or a service internationally.
If you’ve done your market research, you’ll have some idea of who you’ll be selling to and what you might need to change or adapt about your service in order to operate in this market.
Intellectual property and licensing
When selling a non-physical product overseas, a crucial thing to check is the legislation in the country of destination as far as intellectual property is concerned.
If you have an idea that carries a design right or, if very complex, a patent, then you are probably familiar with the protection these grants allow you. You may not have thought about the different ways to structure licences to support the repeated sale of your idea that allow you to maintain ownership of your idea.
Each country you sell to will be part of an agreement on intellectual property (IP) and it is well worth finding out the implications of these agreements on your ability to sell profitably in that market.
The minimum you need is to assert is your copyright (©) in the materials that you use and be sure you have evidence that the materials you have designed for your company belong to you, including the translation and any photography you may have used.
Going international might force you to look at a trademark. If you are using a graphic representation or an unusual name for your product, it may already have the basic TM Trademark rights which are automatic and free of charge. These do not give the same protection as a registered trade mark ®.
The importance of checking the trademark is twofold. Firstly, it’s to protect you and your product both here in the UK and internationally. Secondly, it’s to prevent you from falling foul of international IP laws.
You may be inadvertently infringing someone else’s trademark or IP and that can prove to be a costly and complicated mistake. It might be a good idea to do a quick Google search to establish who else might be using your trade name and make sure you are not in competition.
Most importantly, make sure you’re not about to tread on someone else’s toes in the new market.
If you are operating with an idea that can be packaged and sold for others to deliver, or that contains software, you will need to think about your licencing arrangements and how the legal system in your chosen market respects (or doesn’t) your rights.
Local business culture
It is important to look at how other businesses trade in your chosen market.
Establish if it is normal to use discounting or a system of rebates to support your distribution chain. Do you need to incentivise the sales force or can you sell direct and cut out the need to support the sales and only concentrate of delivery and after sales support if needed?
Think about how you run a business meeting or the style of negotiation in your new market – what are the expected norms? See the Open to Export article on the Bribery Act and how to manage that potential risk.
Look at the IMA Doing business guides, Croner has a full online reference guide for each market and your local DIT International Trade Advisor will be able to assist you in finding out and in preparing to visit.
Learn to use an interpreter and make sure that your presentation is translated into the local language. Yes, they probably will speak English but don’t assume it’s OK to launch straight in with English and no other alternative. These simple courtesies will make an impression, especially at the beginning of any new market relationship. Our article on using an interpreter will be useful for this.
Try not to sell on price alone as the currency exchange rate may fluctuate and you may not be able to be cheaper than your competition so your presentation must be about differentiation and customer care – your customers will appreciate the effort that you make if you translate your collateral and pricing for them. Our article on exchange rates should tell you what you need to know for this.
As for a physical product, it’s important to think about how your customers in your new market are actually going to use your product. Do any colours have a specific meaning in this market? Always get any modifications checked with a native of the market to pick up on any nuances that may be missed by a taught linguist. If this applies to you, the article on selling a physical product will be of use.
What is the broadband infrastructure like away from the main cities in your new country of operations? Would a lack of broadband jeopardise the delivery of your offering or the support for your customers or business partners? What other areas would this impact upon?
Pricing and getting paid
Getting paid is a key element of any business sale so get this right from the beginning. Make sure you quote the right price to get a profit and don’t forget there may be VAT issues that should be checked out with HMRC. Our VAT guide gives advice for how best to go about this.
Talk to your bank or foreign exchange agent to ensure you’re not losing money on currency fluctuations. Try and remember the additional costs of sending people out to support your product offering.
Don’t forget to get Professional Indemnity insurance and that any work carried out in North America or Canada will attract very high premiums. This could impact on the price you charge the client.
Services such as British Expertise, the Chartered Institute of Designers, and Chartered Insurance Institute are good places to start if you’re wondering about whether professional indemnity insurance applies to your business.
Customer care and aftersales support
Make sure you understand how you are going to offer aftersales support if appropriate. Look at how you can use your web site as first line support and make sure that you have a local available to help if you can.
Put yourself in your customers’ shoes – do you like the idea of calling another country when something goes wrong? Look at the experiences of the huge call centres who outsourced to find that only frustrated clients and damaged their businesses. How are you going to avoid this?
Finally, set a part of your web site aside for your new market. Demonstrate that you understand the issues they face. Make them feel a part of your company ethos and vision. Our webinar on adjusting your website for export will be useful.